Get your house in order: Don't lose it to debt

DEAR BRUCE: I earn $60,000 a year. My mortgage is $75,000, and the home is worth about $110,000. My total does include a second mortgage, which I used to pay off a bunch of credit card debt, but now I am back in the same position. I owe $20,000 on my credit cards. I would like to borrow the rest of the balance on my home to pay off these obligations. What do you think? -- Reader, via e-mail

DEAR READER.: I think that you have a very bad habit of spending more than you earn. I don't see where your home has enough equity to borrow to pay off these debts. Even if you do that, if you continue your bad habit of spending so much money, what will you do the next time? It is time to get your house in order, which means putting yourself on a strict budget and if necessary working at a second job to increase your income. Your plan to borrow yourself to prosperity is flawed.

DEAR BRUCE: I am 75 and a recent widow. My son and his family live out of state, and I only see them a couple of times a year. I have adequate, my home is much too large for just me. I would like to sell it and get a smaller home. What do you think? -- I.R., Missouri

DEAR I.R.: I certainly endorse the idea of selling your larger home, but I suggest to you that you seriously consider renting rather than buying another place. Why do you need all the aggravation of home ownership? You can rent for the same amount of money or less. You should take into account the lost income on whatever money you would invest in a home. At your age, why not make new friends and have less responsibility? Since your family is not taking an active interest in you, I'd be out joining clubs, traveling and doing those things that are fun and will help keep you young.

DEAR BRUCE: We are in our late 70s and have about $600,000 in the family trust. My husband recently had some major health issues, and it has caused us to consider setting up an amount outside the trust which either of our two children can access in case of an emergency. What do you think? -- M.C., California

DEAR M.C.: At your age, I think you should consider giving one or both of your children a power of attorney to act in your behalf. You should have enough money available so that they can at least act in an emergency. There should also be some consideration of the possibility of both of you not being able to handle things. This is a problem as people get along in years. Inheritance taxes are not a factor for you and your husband, but having enough money available to handle emergencies should be set up.